Sterne Agee analyts Arvind Bhatia and Brett Strauser analyze Netflix, Inc. (NASDAQ:NFLX)’s new subscription plan. Netflix is testing a $6.99 plan for new subscribers. The plan could attract the more value-conscious consumers but could also somewhat cannibalize existing subscribers.
Netflix is testing a $6.99/month streaming plan
Netflix, Inc. (NASDAQ:NFLX) is testing a $6.99/month streaming plan. The plan is available to NEW subscribers only. This is lower than the current $7.99/month plan. However, the $6.99 plan allows streaming to only one screen at a time versus two screens at a time allowed under the $7.99 plan.
JPMorgan’s Erdoes From Delivering Alpha: How The Pandemic Is Triggering Deglobalization
The more connected the world has become, the easier it has become for investors to look outside their home country to find alpha. However, the pandemic has resulted in a shift toward deglobalization. In an interview on CNBC's Delivering Alpha, JPMorgan Asset and Wealth Management CEO Mary Callahan Erdoes, Alibaba Executive Vice Chairman Joseph Tsai Read More
The new plan likely has at least two goals:
1. Attract the more value conscious consumer.
2. To more effectively compete with Amazon Prime ($80 a year, which works out to $6.67 per month). (Amazon.com, Inc. (NASDAQ:AMZN)- $393.37 – Not Rated).
While the lower price could attract new subscribers, it could also somewhat cannibalize current subscribers given how easy it is to cancel and re-signup for the service.
Also, one has to wonder what impact this would have on Netflix, Inc. (NASDAQ:NFLX)’ ability to raise prices in the future, which is an important part of the long-term bull thesis on the stock and is needed to offset rising content costs.